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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2023-01-11 and last amended on 2023-01-01. Previous Versions

PART VI.1Tax on Corporations Paying Dividends on Taxable Preferred Shares (continued)

Marginal note:Election

  •  (1) For the purposes of determining the tax payable by reason of subparagraphs 191.1(1)(a)(ii) and 191.1(1)(a)(iii), a taxable Canadian corporation (other than a financial intermediary corporation or a private holding corporation) may make an election with respect to a class of its taxable preferred shares the terms and conditions of which require an election to be made under this subsection by filing a prescribed form with the Minister

    • (a) not later than the day on or before which its return of income under Part I is required by section 150 to be filed for the taxation year in which shares of that class are first issued or first become taxable preferred shares; or

    • (b) within the 6 month period commencing on any of the following days, namely,

      • (i) the day of sending of any notice of assessment of tax payable under this Part or Part I by the corporation for that year,

      • (ii) where the corporation has served a notice of objection to an assessment described in subparagraph (i), the day of sending of a notice that the Minister has confirmed or varied the assessment,

      • (iii) where the corporation has instituted an appeal in respect of an assessment described in subparagraph 191.2(1)(b)(i) to the Tax Court of Canada, the day of mailing of a copy of the decision of the Court to the taxpayer, and

      • (iv) where the corporation has instituted an appeal in respect of an assessment described in subparagraph 191.2(1)(b)(i) to the Federal Court of Appeal or the Supreme Court of Canada, the day on which the judgment of the Court is pronounced or delivered or the day on which the corporation discontinues the appeal.

  • Marginal note:Time of election

    (2) An election with respect to a class of taxable preferred shares filed in accordance with subsection 191.2(1) shall be deemed to have been filed before any dividend on a share of that class is paid.

  • Marginal note:Assessment

    (3) Where an election has been filed under subsection 191.2(1), the Minister shall, notwithstanding subsections 152(4) and 152(5), assess or reassess the tax, interest or penalties payable under this Act by any corporation for any relevant taxation year in order to take into account the election.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 191.2
  • 2002, c. 8, s. 184
  • 2010, c. 25, s. 53

Marginal note:Agreement respecting liability for tax

  •  (1) Where a corporation (in this section referred to as the “transferor corporation”) and a taxable Canadian corporation (in this section referred to as the “transferee corporation”) that was related (otherwise than because of a right referred to in paragraph 251(5)(b) or because of the control of any corporation by Her Majesty in right of Canada or a province) to the transferor corporation

    • (a) throughout a particular taxation year of the transferor corporation (or, where the transferee corporation came into existence in that year, throughout the part of that year in which the transferee corporation was in existence), and

    • (b) throughout the last taxation year of the transferee corporation ending at or before the end of the particular taxation year (or, where the transferor corporation came into existence in that last taxation year of the transferee corporation, throughout that part of that last year in which the transferor corporation was in existence)

    file as provided in subsection 191.3(2) an agreement or amended agreement with the Minister under which the transferee corporation agrees to pay all or any portion, as is specified in the agreement, of the tax for that taxation year of the transferor corporation that would, but for the agreement, be payable under this Part by the transferor corporation (other than any tax payable by the transferor corporation by reason of another agreement made under this section), the following rules apply, namely,

    • (c) the amount of tax specified in the agreement is an amount determined for that taxation year of the transferor corporation in respect of the transferor corporation for the purpose of paragraph 191.1(1)(b),

    • (d) the amount of tax specified in the agreement is an amount determined in respect of the transferee corporation for its last taxation year ending at or before the end of that taxation year of the transferor corporation for the purpose of subparagraph 191.1(1)(a)(iv), and

    • (e) the transferor corporation and the transferee corporation are jointly and severally, or solidarily, liable to pay the amount of tax specified in the agreement and any interest or penalty in respect thereof.

  • Marginal note:Consideration for agreement

    (1.1) For the purposes of Part I of this Act, where property is acquired at any time by a transferee corporation as consideration for entering into an agreement with a transferor corporation that is filed under this section,

    • (a) where the property was owned by the transferor corporation immediately before that time,

      • (i) the transferor corporation shall be deemed to have disposed of the property at that time for proceeds equal to the fair market value of the property at that time, and

      • (ii) the transferor corporation shall not be entitled to deduct any amount in computing its income as a consequence of the transfer of the property, except any amount arising as a consequence of subparagraph 191.3(1.1)(a)(i);

    • (b) the cost at which the property was acquired by the transferee corporation at that time shall be deemed to be equal to the fair market value of the property at that time;

    • (c) the transferee corporation shall not be required to add an amount in computing its income solely because of the acquisition at that time of the property; and

    • (d) no benefit shall be deemed to have been conferred on the transferor corporation as a consequence of the transferor corporation entering into an agreement filed under this section.

  • Marginal note:Manner of filing agreement

    (2) An agreement or amended agreement referred to in subsection 191.3(1) between a transferor corporation and a transferee corporation shall be deemed not to have been filed with the Minister unless

    • (a) it is in prescribed form;

    • (b) it is filed on or before the day on or before which the transferor corporation’s return for the year in respect of which the agreement is filed is required to be filed under this Part or within the 90-day period beginning on the day of sending of a notice of assessment of tax payable under this Part or Part I by the transferor corporation for the year or by the transferee corporation for its taxation year ending in the calendar year in which the taxation year of the transferor corporation ends or the sending of a notification that no tax is payable under this Part or Part I for that taxation year;

    • (c) it is accompanied by,

      • (i) where the directors of the transferor corporation are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made,

      • (ii) where the directors of the transferor corporation are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer the corporation’s affairs authorized the agreement to be made,

      • (iii) where the directors of the transferee corporation are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and

      • (iv) where the directors of the transferee corporation are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer the corporation’s affairs authorized the agreement to be made; and

    • (d) where the agreement is not an agreement to which subsection 191.3(4) applies, an agreement amending the agreement has not been filed in accordance with this section.

    • (e) [Repealed, 1994, c. 7, Sch. II, s. 163(1)]

  • Marginal note:Assessment

    (3) Where an agreement or amended agreement between a transferor corporation and a transferee corporation has been filed under this section with the Minister, the Minister shall, notwithstanding subsections 152(4) and 152(5), assess or reassess the tax, interest and penalties payable under this Act by the transferor corporation and the transferee corporation for any relevant taxation year in order to take into account the agreement or amended agreement.

  • Marginal note:Related corporations

    (4) Where, at any time, a corporation has become related to another corporation and it may reasonably be considered, having regard to all the circumstances, that the main purpose of the corporation becoming related to the other corporation was to transfer, by filing an agreement or an amended agreement under this section, the benefit of a deduction under paragraph 110(1)(k) to a transferee corporation, the amount of the tax specified in the agreement shall, for the purposes of paragraph 191.3(1)(c), be deemed to be nil.

  • Marginal note:Assessment of transferor corporation

    (5) The Minister may at any time assess a transferor corporation in respect of any amount for which it is jointly and severally, or solidarily, liable by reason of paragraph (1)(e) and the provisions of Division I of Part I are applicable in respect of the assessment as though it had been made under section 152.

  • Marginal note:Payment by transferor corporation

    (6) If a transferor corporation and a transferee corporation are by reason of paragraph (1)(e) jointly and severally, or solidarily, liable in respect of tax payable by the transferee corporation under subparagraph 191.1(1)(a)(iv) and any interest or penalty in respect thereof, the following rules apply:

    • (a) a payment by the transferor corporation on account of the liability shall, to the extent thereof, discharge their liability; and

    • (b) a payment by the transferee corporation on account of its liability discharges the transferor corporation’s liability only to the extent that the payment operates to reduce the transferee corporation’s liability under this Act to an amount less than the amount in respect of which the transferor corporation was, by paragraph (1)(e), made jointly and severally, or solidarily, liable.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 191.3
  • 1994, c. 7, Sch. II, s. 163
  • 1995, c. 21, s. 41
  • 1998, c. 19, s. 207
  • 2010, c. 25, s. 54
  • 2013, c. 34, s. 153

Marginal note:Information return

  •  (1) Every corporation that is or would, but for section 191.3, be liable to pay tax under this Part for a taxation year shall, not later than the day on or before which it is required by section 150 to file its return of income for the year under Part I, file with the Minister a return for the year under this Part in prescribed form containing an estimate of the tax payable by it under this Part for the year.

  • Marginal note:Provisions applicable to Part

    (2) Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require.

  • Marginal note:Provisions applicable -- Crown corporations

    (3) Section 27 applies to this Part with any modifications that the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 191.4
  • 1994, c. 7, Sch. VIII, s. 116
  • 1998, c. 19, s. 208

PART VI.2Canada Recovery Dividend

Marginal note:Definition

  •  (1) The following definition applies in this Part.

    bank or life insurer group member

    bank or life insurer group member means a corporation that is

    • (a) a bank;

    • (b) a life insurance corporation that carries on business in Canada; or

    • (c) a financial institution (as defined in subsection 190(1)) that is related to any corporation described in paragraph (a) or (b). (membre d’un groupe de banques ou d’assureurs-vie)

  • Marginal note:Tax payable

    (2) Every corporation that is a bank or life insurer group member at any time during a 2021 taxation year shall pay a tax under this Part for its 2022 taxation year equal to the amount determined by the formula

    0.15 [(A ÷ 2) − B]

    where

    A
    is the corporation’s total taxable income (or taxable income earned in Canada if the corporation is non-resident) for
    • (a) 2020 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b), and

    • (b) 2021 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b); and

    B
    is
    • (a) if the corporation is not related to another bank or life insurer group member at the end of each 2021 taxation year of the corporation, $1 billion, and

    • (b) in any other case, the amount determined under subsection (7).

  • Marginal note:Multiple 2022 taxation years

    (3) If a corporation has more than one 2022 taxation year, the latest 2022 taxation year is the 2022 taxation year for the purposes of subsection (2).

  • Marginal note:Multiple 2020 and 2021 taxation years

    (4) For the purposes of subsection (2),

    • (a) if a corporation has more than one 2020 taxation year and the aggregate number of days in all its 2020 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (a) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2020 taxation years; and

    • (b) if a corporation has more than one 2021 taxation year and the aggregate number of days in all its 2021 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (b) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2021 taxation years.

  • Marginal note:Related group

    (5) A corporation that is described in paragraph (a) or (b) of the definition bank or life insurer group member in subsection (1) at any time during a 2021 taxation year and that was related to any other bank or life insurer group member at the end of the year (in this section, the corporation and each such bank or life insurer group member are referred to together as a “related group”) may file with the Minister an agreement in prescribed form, with the prescribed form referred to in subsection (8), on behalf of the related group under which an amount that does not exceed $1 billion is allocated among the members of the related group for the taxation year.

  • Marginal note:Allocation by Minister

    (6) The Minister may request a corporation that is member of a related group at any time during the 2021 taxation year to file with the Minister an agreement referred to in subsection (5) and, if the corporation does not file the agreement within 30 days after receiving the request, the Minister may allocate the amount referred to in subsection (5) among the members of the related group for the taxation year.

  • Marginal note:Allocation

    (7) For the purposes of this Part, the least amount allocated for the taxation year to each bank or life insurer group member under an agreement described in subsection (5) or by the Minister under subsection (6) is the amount determined for B in subsection (2) for the taxation year of that member, but, if no such allocation is made, the amount determined for B in subsection (2) of each bank and life insurer group member for the year is nil.

  • Marginal note:Return

    (8) A corporation that is a bank or life insurer group member shall file with the Minister, no later than the day on or before which the corporation is required by section 150 to file its return of income for the 2022 taxation year under Part I, a prescribed form containing prescribed information.

  • Marginal note:Instalments

    (9) A corporation liable to pay tax for the 2022 taxation year under this Part shall pay 1/5 of the tax to the Receiver General on or before its balance-due day for the 2022 and each of the four subsequent taxation years.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2022, c. 19, s. 48

Marginal note:Administrative provisions — Part VI.2

 Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2022, c. 19, s. 48
 
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